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Tea & Boats

Last week, this newspaper carried at least two articles pertaining to the import-export trade.
One was found on page 4 under the heading “No More Duty Free Boat Imports” and the other, the lead story on the business section (page 33) under the heading, “Seven Reasons For Liberalising Tea.”
In the previous Sunday, ie on May 13, on the boat issue, the business pages of this newspaper also highlighted the dilemma faced by local boat makers due to allowing duty free imports of boats to the island. That article was published under the heading, “Duty Free Imports Blow To Boat Industry.”
Perhaps, as a result of the hype made by the media against duty free boat imports, not least by this newspaper, then, that may have had resulted in Industries Minister Rishad Bathiudeen to come out with this conciliatory statement, ie, the ban on duty free boat imports, a few days later?
But what is ironic, is that it was his Additional Secretary Asitha K. Seneviratna speaking to the media on the “duty free boat issue,” who said that the problem was not with his Ministry, but with the Finance Ministry, which was permitting duty free boats imports into the island (see The Sunday Leader business pages of 13.5.12.).
Now the Finance Ministry comes under President Mahinda Rajapaksa.
Therefore, unless Bathiudeen got Rajapaksa’s concurrence, tacit or otherwise, that duties on boat imports will be imposed or reimposed as the case may be, his statement that duties will once more be introduced on boat imports may otherwise be ascribed to, as being another political gimmick, to soothe the possible furore that may have had been caused when the media exposed the fact that duty free boat imports are allowed into Sri Lanka, to the detriment of the local boat industry, whereas the reality may be that despite all the gung ho against duty free boat imports, that, once the dust has settled, the status quo will continue to remain unchanged?
Another factor highlighted on these pages on the 13.5.12. issue was  that not only were boat imports allowed duty free into the country, but they were allegedly permitted in, without checking as to whether they conformed to minimum safety standards or not, a serious charge, if that allegation is true.
It’s therefore hoped that the Government of Sri Lanka (GoSL) together with the Sri Lanka Standards Institution or any other relevant institution will draw mandatory safety standards applicable to both the local boat industry and boat imports alike, to ensure that the boats used on Sri Lankan waters, at least on paper, are certifiable to be safe.
For that however, neither Bathiudeen nor GoSL need wait till Budget 2013 (see last week’s The Sunday Leader issue). That needs to be done immediately, because in boating, one is directly playing with lives, unless there are certain sacred cows which GoSL wants to protect, but at the expense of whom, lives of human beings or sacred cows, which of the two is more important?
It’s also paradoxical, indeed ironical, that, while GoSL rushes in to impose new vehicle import taxes virtually within 24 hours, it’s however slow in the draw to introduce similar such taxes on imported boats, with Bathiudeen being quoted to have had said that they hoped to include such taxes in Budget 2013, generally due in six months time from now, ie in November.
Such distortions, anomalies and skewed decisions don’t help to build confidence in the GoSL by either the country’s citizenry or by the international community. When a system is unjust and unfair, confidence on the establishment evaporates, setting forth a dangerous trend. Such an environment also gives a negative message to investors, and may only act as a magnet to attract robber barons, leaving the country worse off than before.
Therefore the establishment and the practice of the rule of law are imperative if Sri Lanka is to move forward both economically and politically.

Tea

Also last week, the lead story on the business pages of this newspaper was a seeming apologia for the liberalization of Sri Lanka’s over 100 year old tea industry; made notably by the Tea Exporters’ Association (TEA).
This comes in the backdrop of the island’s powerful Treasury Secretary Dr. P.B.Jayasundera allegedly saying that tea imports for the purpose of blending and reexport will be banned in another three years time in order to protect the local industry.
That may be well and good, but has Jayasundera first examined the facts and figures before shooting his mouth off, by making a statement which sounds more political than being one that makes any economic sense?
In a scenario where the cost of production (CoP) is rising (according to TEA Chairman Niraj de Mel, Sri Lanka has the world’s highest CoP), the island’s tea production stagnating (whereas world production is increasing) and brands gaining ascendancy over geographical indicators such as “Ceylon Tea,” but a silver lining being that Sri Lanka is having the necessary industry expertise to execute a blending operation here, as pointed out by TEA in a recent press conference (see the lead story in the business pages of last week’s The Sunday Leader issue), one wonders whether protectionism or liberalization is the way to go for tea?
This also has to be looked at in the context that the industry is subjected to politicized wage increases once in two years, where productivity is of no account or takes a backseat, in the calculation of such.  Now, the solutions proposed for both of these issues, ie for tea and boats appear to be contradictory.  On the one hand this column advocates protectionism for the boating industry, while on the other, it advocates liberalization for the tea industry. The reason behind these inconsistent stances taken by this reporter is because the boat industry is a fledgling industry which needs space to grow, while the more mature tea industry appears to have had reached its zenith and therefore the time now appears to be ripe to take it to its next level in the form of liberalisation. Therefore in the broader landscape, when taking the factors affecting the tea industry as a whole, high flying bureaucrats like Jayasundera, whether they be sacred cows or not, should not be hasty in arriving at conclusions without weighing in the pros and cons of the matter. Fools rush in, where angels fear to tread.

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